The business of law: operations, investment, and ethics
4 July 2023
The economy of the UK legal sector was the topic of discussion at a recent breakfast briefing hosted by Cardiff Business School.
Chris began by speaking about the structure of the legal profession in the UK. He explained the different types of law firms which currently make up the sector, from large international firms, regional firms, niche and boutique, and high street firms.
Chris described the legal sector as a resilient industry, which has thrived in downturns and upturns. As a £32 billion industry in the UK, it was pointed out that while this number seems large, just one company in the FTSE 100 is bigger than the turnover of the entire legal profession.
Speaking on where the majority of the economy sits within the sector, he explained around 75% is commercial law and 25% people law, including legal aid. This is despite the majority of firms being high street firms that serve the public.
Chris discussed the micro and macro legal economy. He described the legal sector as a people-based economy, with 60% of law firm outgoings being spent on the people that work within them.
He explained: “every lawyer in the country as far as I am aware, records every six minutes of what they do. They record that against a rate. The more people that you have and the more six minute units you can put out, the more that individual firm accumulates in terms of work in progress.”
Chris talked the audience through some graphs illustrating the macro side of the legal profession and the revenue of the 20 largest UK law firms.
He said: “the legal economy has moved from providing legal services to people in communities, to being one designed to provide legal services to essentially the business community.”
On the subject of legal aid cuts and the demise of consumer law, Chris presented some statistics, including:
- 6 million adults in England and Wales are estimated to have an unmet legal need involving a dispute every year.
- The UK is ranked 79th in the world in terms of affordability to social justice.
Graphs illustrated that since 2010, not-for-profit legal aid providers have plummeted, leading to access to justice being hindered.
Chris talked about what he thinks the future holds for the sector. He thinks the future looks bright, due to generational changes happening in society naturally leading to the demand for a different method of operating.
Other topics discussed during the session included: the financial metrics used in law, ethics, and conflicts of interest.
To close, Chris took questions from the audience in the room and online. Questions and comments covered: adopting digital technology in the sector, widening participation routes for entering the profession, in-house legal teams, and pro-bono units run in many major firms.
Chris also discussed new types of law firms which are growing, for example, the Good Law Project and Client Earth, and he touched upon how they operate as a business.
Cardiff Business School's Breakfast Briefing Series is a network of events, which enables business contacts to find out more about the latest research and key developments from industrial partners.